UN Secretary-General Ban Ki-moon has denounced Israeli Prime Minister Benjamin Netanyahu's claim that opposition to Israeli settlements in the West Bank - which is Palestinian territory - amounts to "ethnic cleansing".

Ban said on Thursday that Netanyahu's statement, which appeared in a video released last Friday, was "unacceptable and outrageous", and condemned Israel's settlements in the West Bank as violations of UN law.

"Let me be absolutely clear: settlements are illegal under international law. The occupation, stifling and oppressive, must end," he told the UN Security Council.

In the video posted on Facebook, Netanyahu said that Palestinians wanted to form a state devoid of a Jewish population and called it "ethnic cleansing", prompting heavy criticism.

READ MORE: How Israel aims to redefine 'ethnic cleansing'

US State Department spokeswoman Elizabeth Trudeau called the Israeli leader's words "inappropriate and unhelpful.

"We obviously strongly disagree with the characterisation that those who oppose settlement activity or view it as an obstacle to peace are somehow calling for ethnic cleansing of Jews from the West Bank," she said.

"We believe that using that type of terminology is inappropriate and unhelpful."

International criticism of Israeli settlement building, including from the United States, has intensified in recent months.

Netanyahu's government has nonetheless continued with the policy.

The settlements are considered illegal under international law and major obstacles to peace as they are built on land the Palestinians see as part of their future state.

Ban said Israel's decades-long policy that has settled more than 500,000 Israelis in Palestinian territory "is diametrically opposed to the creation of a Palestinian state".

READ MORE: Israel approves millions for West Bank settlements

Palestinian leader President Mahmoud Abbas has said a future Palestinian state would not permit a single Israeli settler to live within its borders.

The "Quartet" sponsoring the stalled Middle East peace process, which includes the US, Russia, the EU and the UN, are scheduled to meet on the sidelines of the annual gathering of world leaders at the UN next Thursday, according to Russia's UN Ambassador Vitaly Churkin.

The group recommended in July that Israel should stop building settlements, denying Palestinian development and designating land for exclusive Israeli use that Palestinians seek for a future state.

Source: News Agencies